Energizer (ENR) Rips Higher; Completes Initial Assessment of Cost Structure; Reaffirms FY12 Outlook
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Price: $96.46 +0.17%
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Financial Fact:
Advertising and promotion expense: 102.5M
Today's EPS Names:
ANF, DXLG, FL, More
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Energizer Holdings, Inc. (NYSE: ENR) shares are up over 9 percent Tuesday following an update to its internal cost structure assessment.
The press release follows:
[Energizer Holdings] announced that its management team, working closely with independent advisors, has completed its initial assessment of the Company's cost structure and operating model undertaken to improve its cost competitiveness and deliver enhanced financial returns.
Upon completion, Energizer expects to achieve gross annualized pre-tax cost savings of $175 to $200 million. The Company expects that 70-80% of the savings will improve profitability, and the remaining portion of the savings will be reinvested to drive long-term growth. Based on its initial analysis, the Company estimates one-time charges associated with achieving these benefits to be less than 1.25 times gross annualized savings.
Energizer anticipates that modest benefits from these initiatives will begin accruing in the second half of Fiscal 2013 and that a substantial portion of the actions necessary to achieve the total savings will be completed by the end of Fiscal 2014. Upon the approval of a final plan by the Board of Directors, the Company will provide details into the timing of the savings and related costs in its fiscal year-end earnings release and conference call on November 9, 2012.
These savings are expected to be achieved by simplifying processes and substantially reducing organizational complexity and costs, including:
Energizer today also reaffirmed its earnings outlook for fiscal 2012 diluted earnings per share in the range of $6.00 to $6.20 and reiterated its expectation that the diluted earnings per share in the fourth fiscal quarter will be above a year ago.
The Company also announced today that the Nominating and Executive Compensation Committee of Energizer's Board of Directors approved changes to certain components of the Company's executive compensation structure, adding performance metrics to further focus the Company's executives on improving the long-term financial performance of the Company. Historically, both the long-term and short-term executive performance awards have been based on the adjusted earnings per share of the Company. For the fiscal year beginning October 1, 2012, long-term performance incentive awards will be based on three new metrics:
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The press release follows:
[Energizer Holdings] announced that its management team, working closely with independent advisors, has completed its initial assessment of the Company's cost structure and operating model undertaken to improve its cost competitiveness and deliver enhanced financial returns.
Upon completion, Energizer expects to achieve gross annualized pre-tax cost savings of $175 to $200 million. The Company expects that 70-80% of the savings will improve profitability, and the remaining portion of the savings will be reinvested to drive long-term growth. Based on its initial analysis, the Company estimates one-time charges associated with achieving these benefits to be less than 1.25 times gross annualized savings.
Energizer anticipates that modest benefits from these initiatives will begin accruing in the second half of Fiscal 2013 and that a substantial portion of the actions necessary to achieve the total savings will be completed by the end of Fiscal 2014. Upon the approval of a final plan by the Board of Directors, the Company will provide details into the timing of the savings and related costs in its fiscal year-end earnings release and conference call on November 9, 2012.
These savings are expected to be achieved by simplifying processes and substantially reducing organizational complexity and costs, including:
- Manufacturing facility rationalization, including support infrastructure, in the Household Products division;
- Reduction of the global workforce;
- Changes in Energizer's go-to-market strategies, including a streamlined international organization;
- Reduction in overhead spending; and
- Procurement savings.
Energizer today also reaffirmed its earnings outlook for fiscal 2012 diluted earnings per share in the range of $6.00 to $6.20 and reiterated its expectation that the diluted earnings per share in the fourth fiscal quarter will be above a year ago.
The Company also announced today that the Nominating and Executive Compensation Committee of Energizer's Board of Directors approved changes to certain components of the Company's executive compensation structure, adding performance metrics to further focus the Company's executives on improving the long-term financial performance of the Company. Historically, both the long-term and short-term executive performance awards have been based on the adjusted earnings per share of the Company. For the fiscal year beginning October 1, 2012, long-term performance incentive awards will be based on three new metrics:
- Cumulative EBITDA, to reward growth in core operating earnings;
- Return on invested capital, to support the Company's focus on cash flow, including improved working capital performance, and emphasize the importance of capital allocation decisions; and
- Awards will then be adjusted based on the Company's relative total shareholder return performance against peer companies, to align awards received with the return earned by shareholders.
- Cost savings, to focus on delivering on the initiatives announced today to investors;
- Adjusted earnings per share, to encourage the Company's executive team to deliver bottom-line results;
- Company-wide pre-tax operating profit, to reward overall business performance; and
- Net working capital as a percentage of sales, to improve how the Company manages its working capital. The Company will file a Current Report on Form 8-K with the Securities and Exchange Commission with further details regarding these enhancements to the Company's executive compensation structure and metrics.
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